Mortgages

We’ve heard many many stories about homeowners struggling to save their homes, to negotiate with lenders, to sort out whether or not to walk away. In this two-part series, we ask: what about renters. It turns out renters have been caught in the middle of the foreclosure crisis, and they’ve had the least to do with the mess, they’ve been affected quite dramatically by the fallout. And mistreatment of renters in southern Nevada, by lenders, by third party proxies, by landlords, appears to be on the rise.

Listen to the two-part series…

Part I is the story of a man who is trying to answer a seemingly simple question…who changed the locks on his rental condo? Hear his story:

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Part II…This year, legislators enacted a number of laws which give renters some more traction. How effective are these new laws, and where are they falling short?

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The Internal Revenue Service is examining more than 100,000 suspicious claims for the first-time home-buyer tax break, another sign of potential trouble for the soon-to-expire program.

The measure, adopted in February as part of the economic-stimulus bill, gives first-time buyers an $8,000 tax credit in an effort to boost sales and stimulate the moribund housing market. The program is set to end Nov. 30, but housing-industry leaders are lobbying Congress to extend it.

More than a million claims for the credit have been received so far, and housing-industry experts estimated that the credit has helped generate about 350,000 home sales that wouldn’t otherwise have occurred. But some lawmakers and tax experts now say there is evidence that a significant number of the claims might prove to be unjustified, or even fraudulent.

”I am concerned about recent reports that there have been fraudulent schemes involving the credit,” Rep. John Lewis (D., Ga.), chairman of a House Ways and Means oversight subcommittee, said in a statement. The subcommittee is planning a hearing on the problems on Thursday.

The IRS said it was investigating 167 “criminal schemes” involving the credit, according to the subcommittee. IRS officials on Monday declined to describe the suspected schemes or provide additional details.

Commercial real estate is tanking and could get worse, before it gets better, says Moody’s Investor Service. Here’s a snip from a story from the Las Vegas Sun:

Moody’s Investors Service reported Tuesday that the delinquency rate on such loans nationwide hit 3.64 percent in September, up from just 0.54 percent one year ago.

Arizona, Michigan and Nevada led the nation with delinquency rates in September of 9.32 percent, 9.29 percent and 9.14 percent, respectively, Moody’s said.

“After tapering off for two months, the delinquency tracker appears to have resumed an upward trend as expected,” Moody’s Managing Director Nick Levidy said in a statement. “The delinquency rate is likely to continue moving higher over the next several months as troubles compound in the commercial real estate sector.”

KNPR’s State of Nevada did a program segment on the class action lawsuit being brought by Las Vegas Attorney Matt Callister. His clients claim they were defrauded by Indymac – the now defunct thrift that wrote a lot of subprime mortgages. It’s a good show. You can listen to the interview here:

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A bankruptcy judge here, joining judges across the country, is throwing a bit of sand in the gears of the mortgage machine and its ruthless foreclosure blade.

She has raised this issue: In many home foreclosures springing out of bankruptcy proceedings, the foreclosure is being triggered by a representative of the lender — a surrogate that may not have a legal, equity stake in the proceedings.

As a result, it is conceivable — though still something of a legal long shot — that the homeowner who is filing for bankruptcy protection could end up saving his house.

The argument that a lender’s surrogate can’t trigger foreclosure has drawn notice of Nevada homeowners, who are preparing a class action lawsuit. They are seeking a preliminary injunction this month to stop their foreclosures.

(belonginglasvegas.org wants to hear from you….yes, you. How have your circumstances changed over the past year? Have things gotten better or worse? How are you coping with the changes in your life, or with changes you see in your neighborhood? Send us a little about your story, here….)

Leave it journalists to have a nostalgic look back at…well, just about everything. But seriously, the folks at NPR’s Planet Money are following up with several of the folks who they profiled a year ago in their effort to tell the story of the biggest financial mess in recent memory.

A little over a year ago, NPR and This American Life partnered on a series of stories that would explain the mortgage crisis. They called it the “Giant Pool of Money”, and you can listen to the original This American Life program here. The program they made had such a big impact, that NPR/TAL ended up creating a team at NPR focused on money and finance, called Planet Money.

This past week, the Planet Money team revisisted many of the folks who they interviewed for that first show–people we have come to see as archetypes in the mortgage crisis: borrowers, subprime lenders, and those who created the complex financial instruments which repackaged debt in a way that hid the risk of that debt.

You can hear some of these characters…two of the borrowers are here:

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An update on subprime lender Glen Pizzalaruso, who was making $100K a month at the height of the crisis, is here:

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Last week I blogged about Bobbi Giguere, the 41 year-old single mom who had the unusual opportunity to grill a Wells Fargo Exec in court about her stalled loan modification. Giguere had been working “through the system” for months, and getting nowhere (…well, she was actually headed somewhere….While Wells Fargo strung her along, the company was simultaneously moving to foreclose on her home…!) At her wits end, Giguere wrote to her bankruptcy judge and ended up getting to do what thousands of frustrated consumers can only dream about. Confront someone in charge:

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Bobbi Giguere joined us today on KNPR’s State of Nevada to continue the conversation. We were also joined by Nevada Bankers Association president Bill Uffelman, and Bill Buzenberg, Executive Director of the Center for Public Integrity:

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The federal government and states are girding themselves for the next foreclosure crisis in the country’s housing downturn: payment option adjustable rate mortgages that are beginning to reset.

“Payment option ARMs are about to explode,” Iowa Attorney General Tom Miller said….”That’s the next round of potential foreclosures in our country,”…

Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These “underwater” mortgages have been a driving force behind rising defaults and mounting foreclosures.

In Arizona, 128,000 of those mortgages will reset over the the next year and many have started to adjust this month, the state’s attorney general, Terry Goddard, told Reuters after the meeting.

Declining housing prices, combined with a sharp rise in high-cost loans, were important factors in the recent mortgage and foreclosure crisis that has affected metro and non-metro housing markets alike. The most recent data show that non-metro residents were slightly more likely than metro residents to have obtained high-cost loans just prior to the recession.

The New York Times writes about a woman who was given the runaround from her lender. And she decided to go to the mat–in court. Last week, an angry judge gave her an opportuntiy to grill her lender’s attorneys in court…article is here.

Bobbi Giguere had no luck in securing a loan modification from her mortgage servicer, Wells Fargo. For months, she had sent the bank the financial documents it requested to process her modification. But each time she called to check on the request, she was told to send her paperwork again.

“I submitted the paperwork three times, and nothing happened,” said Mrs. Giguere, 41, who has a high school education and worked as restaurant manager before losing her job.

On Thursday, something happened. She questioned a Wells Fargo official about the bank’s lack of response — under oath.

The spectacle of a high-ranking banking executive being grilled by an ordinary homeowner was the result of an unusual decision by Judge Randolph J. Haines of the United States Bankruptcy Court to summon a senior executive from Wells Fargo to appear in Mrs. Giguere’s bankruptcy case.

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BELONGINGLASVEGAS.ORG…

...was created by independent producer Adam Burke, as an online lily pad for stories about people living in southern Nevada. Belonging Las Vegas is a collaboration between Adam Burke and Nevada Public Radio. The project started out as a series of radio stories documenting community life in southern Nevada.

This time around, we're bringing you voices and faces: how people, families, and neighborhoods are faring in the worst economic downtown in Las Vegas' hundred year history. It's a story of hardship and challenge to be sure, but also one of generosity, innovation and reckoning.